Federal Reserve Chairman Ben Bernanke said Monday that the U.S. must reduce its budget deficit, as well as encourage Asian nations to consume more so it doesn’t lead to a global unbalance. In a news conference Bernanke stated that Asian nations must stop saving their money and start spending, while the U.S. needs to do the opposite. In order to prevent global imbalance the United States must “increase its national savings rate.” Bernanke also stated that the Asian leaders should take action by encouraging their citizens to spend more.
3 comments:
This is an interesting article after learning about the HPAEs. It may be hard for the US to try to encourage the Asian nations to increase their consumption just because it is a part of their culture to save. However, a large reason for their tendency to save is because they have no retirement benefits and therefore, Bernanke's proposal of the government providing pensions and other subsidies could have potential.
I agree with Brandon about the difficulties in making a thrifty nation spend more. I also think that the government needs to do something more proactive then asking Asia to spend. Perhaps they could stop spending billions of dollars on "stimulus" that is not having the desired results.
I believe this is a tough choice to make for the US government. I agree with Bernanke's idea that we should reduce government deficit by increasing saving rates of citizens. However, he does not show exactly "how" in this article. I suspect people do not have enough money to save at the first place. In addition, I feel changing Asian people to spend more is even harder since they are acting for their own habits and interests.
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